World Bank approves $1.5 Billion to India for low-carbon economy
The World Bank’s Board of Executive Directors has approved $1.5 billion in financing for a second initiative to help India accelerate the development of low-carbon energy. This initiative aims to promote a vibrant market for green hydrogen, scale up renewable energy, and stimulate finance for low-carbon energy investments.
As the fastest-growing large economy in the world, India’s continued rapid economic expansion necessitates decoupling growth from emissions. Achieving this will require scaling up renewable energy, especially in hard-to-abate industrial sectors, and expanding green hydrogen production and consumption. Additionally, there is a need for accelerated development of climate finance to support low-carbon investments.
The Second Low-Carbon Energy Programmatic Development Policy Operation, the second of two similar operations, will support reforms to boost the production of green hydrogen and electrolyzers, critical technology for green hydrogen production. The initiative also supports reforms to enhance renewable energy integration, including incentivizing battery energy storage solutions and amending the Indian Electricity Grid Code to better integrate renewable energy into the grid. In June 2023, the World Bank approved the $1.5 billion First Low-Carbon Energy Programmatic Development Policy Operation, which supported waiving transmission charges for renewable energy in green hydrogen projects, issuing a plan to launch 50 GW of renewable energy tenders annually, and creating a legal framework for a national carbon credit market.
“The World Bank is pleased to continue supporting India’s low-carbon development strategy, which will help achieve the country’s net-zero target while creating clean energy jobs in the private sector,” said Auguste Tano Kouame, World Bank Country Director for India. “Both the first and second operations focus on boosting private investment in green hydrogen and renewable energy.”
The supported reforms are expected to result in the production of at least 450,000 metric tons of green hydrogen and 1,500 MW of electrolyzers annually from FY25/26 onwards. Additionally, these efforts will significantly increase renewable energy capacity and reduce emissions by 50 million tons per year. The operation will also support steps to further develop a national carbon credit market.
“India has taken bold action to develop a domestic market for green hydrogen, underpinned by rapidly expanding renewable energy capacity. The first tenders under the National Green Hydrogen Mission’s incentive scheme have shown significant private sector interest,” said Aurélien Kruse, Xiaodong Wang, and Surbhi Goyal, Team Leaders for the operation. “The initiative is helping scale up investments in green hydrogen and renewable energy infrastructure, contributing to India’s journey towards achieving its Nationally Determined Contributions targets.”
This operation aligns with the Government of India’s energy security goals and the Bank’s Hydrogen for Development (H4D) Partnership.
The financing for the initiative includes a $1.46 billion loan from the International Bank for Reconstruction and Development (IBRD) and a $31.5 million credit from the International Development Association (IDA).
